Evergrande Creditors Demand Further Explanation For Billions In Seized Cash
A group of foreign creditors to China Evergrande Group is asking the company for more information related to the seizure of 2.8 billion of cash at its property services arm.
By ALEXANDER SAEEDY
Thu, Jul 28, 2022 12:04pm 3min
A group of offshore creditors to China Evergrande Group are demanding additional information about the seizure of nearly $2.8 billion by local banks that could explain how the troubled property developer pledged the funds without investors’ knowledge, according to people familiar with the matter.
Last Friday, Evergrande released the preliminary results of an investigation into the missing funds pledged as security for loans by an offshore subsidiary that manages Evergrande-built properties. Evergrande also announced last week that it ousted its longstanding chief executive officer, Xia Haijun, and its finance chief, Pan Darong, over their involvement in the arrangements, as well as four executives from Evergrande and its subsidiary.
However, some creditors don’t believe that the company sufficiently explained how the funds were guaranteed to banks without any form of disclosure to investors, and they haven’t received any explanation beyond what the company has said publicly about the seized cash, people familiar with the matter said.
This week, a group of Evergrande’s largest offshore creditors, which own secured debt backed by assets at the subsidiary, wrote to the company requesting additional information on which executives were directly responsible for the pledges, which banks enforced their claims on the assets and how the company specifically plans to compensate them for the lost funds, which represent most of the subsidiary’s cash, the people said.
The continuing tension between Evergrande and its foreign creditors highlights how Evergrande has struggled to meet investors’ demands for transparency nearly eight months since it defaulted on its foreign debts and just days before the anticipated release of a restructuring plan the company promised to deliver by the end of this month.
Evergrande and advisers to the company’s offshore creditors didn’t return requests seeking comment.
Last week, Evergrande published preliminary details related to its investigation of 13.4 billion yuan (about $2.8 billion) in cash pledges at its Hong Kong-listed property management unit, Evergrande Property Services Group Ltd., which guaranteed third-party borrowings diverted to the parent company.
Banks later seized the funds, which were used to help finance the parent company’s general operations from late 2020 until the end of 2021, when the third-party borrower failed to repay the debt, according to the report.
The seized funds constitute more than 90% of the property service arm’s 14.03 billion yuan cash holdings as of June 30, 2021, according to the subsidiary’s interim statement.
“It seems to me that Evergrande has leveraged the majority of cash in the service arm to feed the parent company,” said Iris Chen, a credit analyst at Nomura International Hong Kong Ltd.
“Given that the service arm is a key asset that is directly held by the parent group, the misuse of cash will hurt the valuation of the service arm and therefore impact the recovery value of the parent company’s offshore bonds,” she said.
Analysts and investors said the incident will likely weigh on investors’ ultimate recoveries in a debt restructuring and underscores longstanding transparency concerns raised by Evergrande’s offshore creditors. The company and bondholders have sparred in the past over inadequate disclosures, and foreign bondholders have previously threatened to sue or liquidate the company for failing to engage with them.
“From the disclosure, one can see the poor corporate governance of Evergrande in the past, and the type of off-balance sheet debt arrangement it made, which negatively impacts bondholders’ overall recovery,” said Michel Lowy, co-founder and CEO at SC Lowy, a Hong Kong-based high-yield and distressed-debt manager.
Evergrande, the world’s most indebted developer with more than $500 billion in liabilities, defaulted on its U.S. dollar bonds in December after monthslong liquidity problems, and its Hong Kong-listed shares have been suspended since March.
The company’s debt restructuring is progressing amid a property crisis in China, where crackdowns on excessive borrowings have led to real-estate developer defaults and stalled housing projects. Outraged by long-overdue construction projects, home buyers have threatened to stop mortgage payments on unfinished apartments.
Reprinted by permission of The Wall Street Journal, Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: July 27, 2022.
Copyright 2020, Dow Jones & Company, Inc. All Rights Reserved Worldwide. LEARN MORE
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
The designer’s Mind: Delving into the Best Interior Design Books
By Kanebridge News 24/05/2023
Here’s What It Looks Like When Americans Retire Overseas
By ANNE TERGESEN 22/05/2023
Why Wealthy Homebuyers Are Flocking to Puerto Rico
By E.B. SOLOMONT 19/05/2023
The designer’s Mind: Delving into the Best Interior Design Books
By Kanebridge News
Wed, May 24, 2023 3min
There’s no shortage of design inspiration online but nothing beats the joy of spending an afternoon immersing yourself in a good interior design book. Edited, carefully curated and, above all, designed, these titles take you behind the scenes of some of the world’s most beautiful interiors in a considered way. Think of it like the difference between listening to a few tunes on Spotify versus releasing a thoughtfully crafted studio album. We’ve assembled our top six of interior design books on the market right now for your viewing and reading pleasure.
1. Interiors beyond the primary palette
Step inside the world of award-winning interior design duo Juliette Arent and Sarah-Jane Pyke in this, their first compendium of their work. A ‘best of’ over more than 15 years working together, it’s a masterclass in working with colour and pattern as seen through 18 projects from around the country. With a focus on the idea of home as sanctuary, this hefty tome offers insight into the mind of the designer with points on where to findinspiration, meeting client briefs and the importance of relationships. Thames & Hudson, $120
2House of Joy
If there was ever a book title for our times, then this is it. With a subtitle of Playful Homes and Cheerful Living, this book champions fun in interior design, with bold and bright homes from around the world to delight and inspire. While there’s a good dose of the unexpected, like a disco ball in the garden, there’s no mayhem in these spaces. Instead, they’re beautifully executed to tempt even the most colour shy. Gestalten, $105
3. Abigail Ahern Masterclass
Some design books are beautiful to look at, and that’s it. This is not one of those books. A master of colour and pattern, UK designer Ahern offers a practical foundational guide to beautiful interiors, mixing form with function in her latest book, Masterclass. Find the inspiration you need to create a gorgeous home. HarperCollins, $65
4. Interiors Now!
Looking for a visual crash course in international design trends with longevity? This is the book for you. Featuring homes across the globe, from New York to Auckland via Avignon, the biggest dilemma for readers is settling on a style. Many of the projects are owned by designers and creatives, lending a dynamic edge to this tome, now in its 40th year. Taschen, $50
5. Home by the Sea
For many Australians, the ocean holds an almost hypnotic appeal. Home by the Sea by Natalie Walton lets you imagine, for a little while at least, what it’s like living the dream in a beach shack in Byron Bay. The book tours 18 homes in and around the region and the hinterland owned by artists, designers and makers. With photography by Amelia Fullarton, it champions the good life. Hardie Grant, $60
6. The Layered Interior
Released last year, this is the third volume from award-winning interior designer Greg Natale. Different in format from his earlier books, the eight projects featured are Australian but with a slight Euro-centric focus. The writing is conversational, almost intimate, inviting the reader into the most luxurious spaces beautifully captured by photographer Anson Smart. This coffee table tome is perfect for dreamers and doers alike. Rizzoli, $110
What goes up, must come down. But not necessarily this fast. Canadian marijuana stocks that posted staggering gains on Wednesday fell just as fast Thursday, while U.S. multistate operators, or MSOs, were dragged down, but fared a bit better. Tilray stock (ticker: TLRY) fell 49.7% Thursday, erasing all its gains from the prior trading day. Aphria stock (APHA) closed down …